The Technological Revolution Reshaping the MGA Landscape in 2025

The insurance industry is at an inflection point. Rapid technological transformation is underway, and MGAs are at its centre. In 2024, 76% of U.S. insurance companies integrated generative AI into at least one business function, and by 2025, this trend is expected to evolve into enterprise-wide adoption. For MGAs, leveraging new technologies is no longer a choice but a necessity for survival and growth.

Encora, the specialist global digital engineering company with a cloud-first, data-first, and AI-first approach to Insurance, helps MGAs drive efficiency, market expansion, and differentiation. The divide between tech-enabled MGAs and traditional players is widening, creating significant opportunities for those embracing digital transformation. With nearshore agility in Europe and expertise-at-scale from Latin America and India, Encora delivers targeted value across the specialty insurance value chain.

The Rise of Agentic AI

Agentic AI is the next evolution of generative AI, capable of making independent decisions and continuously improving over time. Unlike traditional AI models that rely solely on training data, Agentic AI can process more business transactions with greater accuracy, manage complex tasks such as risk assessment and policy administration autonomously, and allow human specialists to focus on complex cases requiring expert judgment.

Enhanced Underwriting: Data-Driven Precision at Scale

Enhanced Underwriting is where digital tools, data analytics, and algorithmic approaches come together to transform the management of specialty risks.. This is particularly crucial for MGAs handling complex risks such as cyber threats, climate change, and geopolitical instability.

A report from the Lloyd’s Market Association (LMA) highlights that enhanced underwriting currently accounts for $5 billion in business, making up 7% of Lloyd’s written premiums in 2023. Industry players, including carriers, MGAs, and brokers, are developing at least 40 enhanced underwriting models, with many more anticipated in the next few years. These advanced tools enable MGAs to confidently enter new markets and optimize risk selection, unlocking unprecedented opportunities.

The Embedded Insurance Revolution

Embedded insurance is transforming how coverage is distributed and consumed, with the market projected to reach $70 billion in Gross Written Premiums (GWP) by 2025. MGAs are spearheading this growth through three primary distribution models:

1. Broker-led distribution: Traditional models enhanced with digital capabilities for more efficient collaboration between MGAs and broker partners.
2. Direct-to-consumer: Fully digital MGAs marketing policies directly to consumers online without intermediaries.
3. Embedded insurance: MGAs integrating insurance coverage within non-insurance platforms such as e-commerce websites, travel booking applications, and fintech services.

Low-code platforms are particularly valuable in this evolution, enabling MGAs to quickly develop and integrate new products with third-party systems, responding to consumer demands with agility.

The Tech-First MGA Model: Predict and Prevent

The rise of tech-first MGAs that bundle risk mitigation technology with insurance coverage shifts the focus from the traditional “detect and repair” approach to a “predict and prevent” model, where losses are reduced before they occur.

By bundling risk management technology with insurance policies, MGAs simplify decision-making for policyholders and offer better pricing models. For insurers, this strategy incentivizes risk mitigation, leading to improved loss ratios and more competitive pricing structures. This model is particularly advantageous for MGAs specializing in hard-to-place or emerging risks such as cyber threats, cannabis-related businesses, and drone operations, where traditional insurers may be hesitant to offer coverage.

Navigating AI Risks

Despite the benefits of AI, its rapid adoption introduces risks related to liability, regulation, and coverage. The Kennedys Global Forecast Report identifies AI itself as the most critical risk facing the insurance sector in 2025. The speed at which we’re adopting AI is creating uncertainty around liability, regulation and insurance coverage.

That uncertainty stems from the risk that traditional policies might inadvertently cover unpriced AI-related risks. Tom Pelham, Kennedys’ global head of cyber and data, puts it this way: “You have to be able to adapt quickly to the changes AI will bring if you want to survive.” Data security, privacy, and integration are the top barriers to widespread AI adoption.

Evolution of Automation

Automation in the MGA sector is evolving beyond traditional robotic process automation (RPA) and standalone solutions. Modern intelligent automation platforms integrate AI, orchestration, and deep insurance expertise, enabling MGAs to make real-time decisions, streamline operations, and enhance efficiency across the insurance value chain. Early adopters of these advanced automation platforms are experiencing significantly higher returns on investment compared to conventional automation methods.

Conclusion

The MGA landscape is undergoing a fundamental transformation, driven by AI, enhanced underwriting, embedded insurance distribution, and tech-first risk mitigation models. Success in 2025 hinges on the ability to embrace and navigate these technological advancements while addressing the risks associated with AI adoption.

Encora, with a workforce of 9,500 engineers across 20 countries, is recognized as a Leader in “Next-Gen Application Development & Maintenance, Data Engineering & Data Science” by the ISG Provider Lens. As a member of the exclusive Microsoft Azure AI Foundry Partner Council, Encora offers specialized services including AI-driven software development, software automation, cloud-native and multi-cloud engineering, data integration services, composable and MACH architectures, legacy system modernization, specialized DevSecOps, and Well-Architected, Zero-Trust frameworks tailored for the insurance industry. By leveraging these cutting-edge technologies, Encora is helping MGAs reshape the future of insurance globally.

Encora:

London office: New Broad Street House, 35 New Broad Street, London, EC2M 1NH

Phone (landline): +44 203 442 1140

Email: insurance@encora.com

Web: www.encora.com